When done right, fiscal sponsorship is a valuable alternative to starting a nonprofit that produces private and public efficiencies through shared administration and fewer nonprofits requiring fiduciary and regulatory oversight.

But when done wrong, fiscal sponsorship may result in an individual or for-profit company inappropriately deriving a private benefit from charitable contributions. This may occur when the fiscal sponsor acts as a mere conduit for contributions to flow to the individual or company without exercising the required control and oversight.